In July it was $1.81 (yah!)
In August it was $1.54 (sad face)
In September it was $1.52 (is it stabilising?)
In October it was $1.33 (whoa, hold up).

It means that many people are now considering jumping out of Select and distributing wide again. Even I’m considering it, but I wanted to take any emotions I had out and see if it made good business sense to stay or go.

Let’s take the latest figure of $1.33 to make the calculations, since it’s the lowest (so far), so it’s (currently) worst case scenario. I don’t want to speculate whether it’ll rise or fall in the future because my last crystal ball stopped working after the last update (heh).

I’m also going to use the Amazon royalty rates rather than each store for sake of easy math because I’ll too lazy to look up the rates at each store – but they’re similar enough not to make too much of a statistical difference.

So back to $1.33.

Obviously if you price your books lower than $2.99 you are still better off in KU as the royalty is substantially higher.

At 0.99 cents your royalty is (0.99 x 35%) = 35 cents
At 1.99 cents your royalty is (1.99 x 35%) = 70 cents
(even at 2.98 your royalty is $1.04 at 35% but no one is crazy enough to price there when one cent higher bumps you into the 2.99 royalty so I don’t know why I’m even bringing it up.)

For shorts and promo books priced low, KU is still good value.

What about those books priced in the 70% bracket?

Here are five popular prices for books on Amazon and where many indies price themselves:

* I’m rounding down to take into account delivery fees. These fees vary according to file size.

On a 1:1 ratio, it looks like you lose money on borrows under the 70% bracket.

BUT

Most people are reporting many more borrows than sales, so it’s not a fair comparison.

Now every book and every author is different and will have different borrows to sales ratios, you can (and should) calculate your own.

Let’s use a ratio of 2:1 borrows to sales because that’s what mine is for my whole catalog (my fiction alone has a much larger borrow to sales rate, I’ll get to that below).

Therefore 1.33 x 2 = $2.66

So price points $2.99 and $3.99 are still good to have in KU comparatively (at this stage).

Priced above that? Then it depends.

My non fiction is priced higher than my fiction. They also don’t have the same borrow rate as my fiction does. Once the Select terms are finished for the two non fiction I have in, I’ll pulling them out of Select and distributing wide again.

The fiction, for now I’m keeping it in. I have one novel that has a 16 borrows to 1 sale ratio. For some reason this book just doesn’t sell much but gets lots of borrows (it’s priced at $3.99).

There is another thing to take into account too:

Borrows count for a books ranking (some are speculating that it gives a bigger rank boost than a regular sale, but I have no idea.) So the extra visibility that you get for that rank might make a lower payout more palatable.

At the end of the day, for me, it’s still worth it to keep my fiction in. The borrows more than make up for any lost sales on other sites. (I never sold much there anyway).

How much would it drop before I’m out?

I wanted to figure out, for me, how much could the KU payout drop before it would no longer be economically viable to stay in?

My fiction priced under $0.99 is staying in even if the payout falls to 35 cents since that’s equal to the sale royalty. (I don’t have anything at 1.99).

For my $2.99 titles, I’ll stay in as long as the borrow payout is above 45 cents. $3.99 titles will stay in above 60 cents, and $4.99 titles will stay in above 76 cents. (These figures have been calculated by dividing the royalty rates above by 4.5 (my current ratio)).

So therefore I’m still in a very healthy place right now, even at $1.33. It could theoretically go as low as 76 cents and I’ll still keep my all fiction in. Below that and I start taking my higher priced books out depending on where it settles.

I hope it doesn’t of course because I like money, but at the moment I’m still better off staying in.

Update 21 Aug: We made $1.80 for July’s borrows. That’s awesome. It still has to settle down, but so far August’s numbers are looking even better in terms of borrows. There is currently some updating going on at Amazon’s end (they are re-adjusting for the 10% read threshold) but I haven’t lost many borrows yet. I’m super pleased with how KU is working out for me.

—

I’m not much of a risktaker. I once holidayed in Las Vegas for three days and only put ten dollars into the machines, just so I could say I gambled in Vegas. I don’t buy lottery tickets and if you tell me your sure thing at the horse races I’ll nod politely and change the subject. Even my stockmarket buys require lots of research before I’ll hand over my money.

But when Kindle Unlimited was announced last month my heart began to beat a little faster. A way for people to read your books without risk, and for me to get paid for it. Oh boy, could this really help my floundering sales?

Up until now I have been a strong opponent of the Kindle Select program because of its exclusivity. While I could understand the benefits, none of those were enough to entice me away from sales on other platforms. I was doing well at Apple, less so at Barnes & Noble, and had just starting experimenting with titles at All Romance Ebooks.

But the Kindle Unlimited siren was calling to me, sweetly, softly, seductively.

I opened my spreadsheets and analysed my figures. How much was I really making on the other platforms? Would the rise in borrows offset any profits I lost? What would be the long-term impact? Would this impulsive decision be just too crazy to take, especially for risk-aversion me?

I could clearly see that I was making good money everywhere with my non-fiction, but my fiction was primarily Amazon only. So after discussing it with my husband, I pulled all my twenty-seven fiction titles from the other stores and enrolled them in Select. After all, if it didn’t pay off I could always re-publish after the 90 days was up.

Now, of those 27 fiction titles, four are novels, two are novellas, and the rest are short stories or short story collections. This is important to note, because many of the short stories are priced at 0.99 cents, meaning for a full sale I get $0.35’ish profit. What I get as a borrow with KU is still conjecture, but if it’s higher than my current royalty it’ll be a win. It was this reason I figured that even if it replaced sales entirely, it would be beneficial.

Sales about the same. Borrows significant, often surpassing sales.

Did I make the right decision?

It’s far, far to early to tell. We won’t know what KU pays for a borrow until the next few days. People have been speculating it could remain around $2, while others predict it could go as low as ten cents. We simply do not know. We also do not know what the borrows will be like after customers finish their free trials.

At this stage, even without knowing what the borrow rate is, I’m happy. The borrows have increased my rank and while sales haven’t changed, I’m hitting a few low sub-genre lists. I’m still not making great money yet, although it does look promising.

What about the exclusivity?

It’s true that I don’t like it. But this is a pay to play game, and if I wanted to be in Kindle Unlimited I had no other choice. Each author has different decisions to make and for me, I chose to jump in. Your experience will be different.

I’m holding my breath now waiting anxiously for the announcement to see what my return on investment will be. Will it be low, high, middle? I can’t say, although I’m cautiously optimisitic. Like most new programs that Amazon implements, it’s usually the early adopters that do best.

My only prediction is that we’ll be seeing quite a few news/blogs over the next few days with “I told you so’s” from both camps.